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Fuel Fund is after getting Rs. 48 b from Treasury : Gammanpila
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There is no Rs. 48 b to give : Attygalle
Minister of Energy Udaya Gammanpila[/caption]
Speaking to The Sunday Morning Business, Minister of Energy Udaya Gammanpila stated that the Cabinet of Ministers has already allocated Rs. 48 billion for the implementation of the price stabilisation fund.
“The Treasury said it will give that amount to us; after that, we will start the fuel stabilisation fund,” Gammanpila added.
However, when contacted, Treasury Secretary Attygalle stated Rs. 48 billion was given to the CEB, and added that stabilisation has to be done in some other way, as these are all state-owned enterprises.
“In fact, it is not Rs. 48 billion. It is Rs. 50 billion, and that money has been given out already. We will see whether we can adjust any taxes,” he added.
The Rs. 48 billion, or Rs. 50 billion as Attygalle mentioned, is the collection of the initial fuel price stabilisation fund that was formed immediately after the initial local outbreak of the virus, when the global oil prices were at their most negative levels. The Ministry of Finance imposed an additional duty per litre of fuel sold by Lanka Indian Oil Corporation (LIOC) and Ceylon Petroleum Corporation (CPC), as the Government decided to maintain fuel prices despite the historical drop in global oil prices. Therefore, the aforementioned institutions were allowed to sell oil with a widened profit margin, while this additional duty was channelled directly to the Fuel Price Stabilisation Fund.
Treasury Secretary S.R. Attygalle told The Sunday Morning Business in December that this additional duty was temporarily removed when global oil prices were returning to their previous levels.
According to Attygalle, the fund has only raised about Rs. 50-60 billion, which is significantly less than the Government’s initial intention to collect Rs. 200 billion under the fund within a period of six months.
“There is no money in the fund at the moment. We paid some fuel dues to the Central Bank of Sri Lanka. We lent the rest to Ceylon Electricity Board (CEB) to settle their outstanding payments to the CPC,” he noted.
The fund was initially established to repay the outstanding debt of the CPC and CEB. Shortly after the General Elections in August, The Sunday Morning Business exclusively reported that half of the CEB’s outstanding payments to the CPC were settled by utilising Rs. 48 billion from the fund.
Following the revision of duties on fuel on 13 March, the revised import duty per litre of 92 Octane petrol was Rs. 12. The overall recoverable import duty on 92 Octane petrol was Rs. 30. Meanwhile, the revised import duty per litre of 95 Octane petrol was Rs. 15, duty per litre of Super diesel was Rs. 20, and duty per litre of Auto diesel was Rs. 11.
According to a World Bank article published on 27 October 2020, after plunging significantly in March and April, crude oil prices saw a robust recovery in May and June, averaging $ 42 per barrel of oil in the third quarter of the year. However, they remain at almost one-third lower than their 2019 average.
About three months after the establishment of the fund, Minister of Trade and Co-Cabinet Spokesman Dr. Bandula Gunawardana stated that the fund had not grown as expected due to a drop in consumption.
In late November 2020, Minister of Energy Udaya Gammanpila stated that maintaining local fuel prices amidst fluctuating global oil prices is the policy of the present Government, and added that the Ministry is looking at the establishment of a separate stabilisation fund by studying contemporary market trends, for this purpose.